U.K. Prime Minister David Cameron outlined a plan to expand the number of people who can purchase discounted homes as the government seeks to boost homeownership.
Queen Elizabeth II, formally opening Parliament, announced Cameron’s Housing Bill in a speech Wednesday. The government will offer 1.3 million poorer families the chance to buy their rented homes under a plan known as Right to Buy. It will also give 200,000 first-time buyers under the age of 40 the opportunity to buy homes at 20 percent below the market value.
“For too long we’ve been a two-speed country,” said Cameron, whose Conservative Party won a majority in national elections earlier this month. “Some could afford a home; others could not. A one-nation government will change that.”
The Right to Buy policy will be extended to nonprofit housing associations that are some of Britain’s biggest landlords. About 221,000 of the newly eligible households earn enough to afford a mortgage for their home and would receive about 11.6 billion pounds ($17.9 billion) in discounts if they purchase them, according to an estimate by the National Housing Federation, an affordable homes lobby group.
“We remain concerned about the expansion of Right to Buy,” Adam Challis, head of residential research at broker JLL, said ahead of the Queen’s speech. “Government should be investing to create a vast quantity of new affordable homes, not taking stock out of the system.”
The Right to Buy tenants will be entitled to a maximum discount of about 103,000 pounds for London homes and almost 80,000 pounds elsewhere, the NHF said last month.
Borough councils will have to sell their most expensive council homes when they become vacant to fund the discount, the government said Wednesday. The proceeds will also be used to pay for the construction of more affordable homes in the boroughs.
“There will be a time lag between selling off stock and building new properties,” Richard Sexton, a director at property valuer e.surv, said by e-mail yesterday. “In the meantime, the waiting list of tenants needing housing could get substantially longer.”